Section 5: Obstacles to Continuous Improvement

Review of the operational performance is seldom based the organization’s productivity. Most review decisions are decided on the basis of whether they increase the organization revenue and not on its profitability. These reviews are prepared by the managers and the senior manages who assume that the actual operating performances that they are monitoring somehow will lead to increased profitability.

However, the operating performance indicators reported though may be factual but they often do not tell the truth of the profitability of the organization. More often than not, these statistics were designed to report that the profitability growth of the organization is okay or even excellent while in actual fact, its true profitability may be deteriorating or its profitability is already falling way behind its competitors.

In discerning whether a set of operating performance indicators is well designed or not, the ultimate test is whether issues that affect the organization operational productivity are surfaced for corrective action or simply, buried out of sight.

The set of productivity indicators can be described as akin to a magnifying glass that amplifies the occurrence of an abnormality and therefore, engage the managers to quickly resolve the issue before it get blown out of hand or akin to an eye mask that covers up issues and leading to the management team to assume that since everything is well therefore, there is no need to take any corrective action to rectify any issue that is dragging down its productivity.

One of the most effective way to ensure that the operational performance indicators is not designed to present a feel-good factor when it actual is not, is to for you to understand the following concepts. They are: how each productivity indicator is chosen; the pitfall of the piece-rate productivity incentive scheme; Kaizen; misused of SPC and the fallacy of enjoying a first-to-market advantage.